BU: GOLD PRICE OFF 4-MTH HIGHS, ALL EYES ON ECB/CHINESE GDP
The gold price slipped in early morning London trading but remains elevated while market participants await a possible announcement on quantitative easing (QE) in the Eurozone and Chinese GDP figures.
Spot gold was last at $1,276.00/1,276.80 per ounce, down $3.10 but not far below the four-month highs hit in the pre-weekend session at $1,282.50.
“Gold is performing strongly, having overcome numerous chart resistance areas – the danger is it runs ahead of itself to become overbought in the short term. That said, this time last year the rally carried on for a considerable period, with prices climbing further than the market thought likely at the time,” FastMarkets analyst William Adams said.
The European Central Bank (ECB) is set to meet on Thursday, which could see some movements in currencies, with many market participants expecting it to introduce a QE programme.
“While gold should benefit by it, monetary measures by the ECB will further burden the euro,” Heraeus said in a note. “Currently gold is not affected by the strong USD.”
The euro is set to remain jumpy ahead of Greek parliamentary elections on January 25 that could trigger a debt default by Greece and a fresh eurozone crisis. The single currency was last trading around 1.1622 against the dollar – last week it bottomed out at 1.1459, the lowest since November 2003.
The recent surge in safe-haven demand for gold will continue, MKS said, particularly in light of the Greek elections. Polls indicate large support for the anti-austerity Syriza party, which has said it will snub austerity measures imposed by the country’s 240-billion-euro international bailout.
A slump in Chinese equities is also weighing on sentiment. The CSI 300 dropped almost eight percent, partly in response to the steps taken by the China Securities Regulatory Commission against three of the country’s largest brokerage firms.
The Chinese government is due to release its economic statistics for 2014. GDP growth is expected to fall short of its 7.5-percent GDP target to its slowest in 24 years, with the likely figure at 7.3 percent, down from 7.7 percent in 2013.
The data calendar today is quiet, with the US absent for the Martin Luther King Day holiday.
In other metals, silver has retreated from pre-weekend four-month highs – it was last down eight cents at $17.66/17.71 per ounce but remains supported by solid physical demand in the US
“A respective flood of liquidity as well as ongoing low to negative interest rates could further drive investors into investment metals,” Heraeus added, pegging support at $17.00 per ounce. “After the resistance at $17.20 per ounce was broken on Friday, the next resistance level is at $18.00.”
In the PGMs, platinum was down $2 at $1,259/1,269 per ounce after hitting a three-month high on Friday at $1,270, while palladium, after sustaining heavy losses last week, climbed $12 to $763/768.
